Find Suppliers for Ecommerce Sites

September 13th, 2007 by Chris

This question was asked what I solicited reader opinions on what to blog about, it has also been asked recently in PMs to me a couple times, so I decided to tackle it today.

When I first wanted to get into ecommerce I did what I’m sure many of you have done and worked the Internet searching for “dropshippers” or “distributors” or “wholesalers” etc. This was a completely worthless expenditure of time and effort. I did not get one solid lead by search from that end. Not one. Mostly I ended up finding crap directories or lists of nonexistant or no-longer in business or shady dropshippers. Yuck!

The method of finding a supplier that has worked, in contrast, nearly 100% of the time, has been to start from the product and work my way backwards. I buy (or examine in the store) the product I want to sell. I use the product packaging, warranty card, instructions, or other such documentation that comes with the product to figure out who the manufacturer is. I then find the manufacturer’s phone number and I call them. Sometimes they deal with retailers directly and I need to fax my sales tax license and sometimes a credit application or credit card authorization and that is all it takes. Other times they direct me to a distributor they recommend I use. But it almost always ends up working out.

There is a reason that when I explain to people how to pick a product for ecommerce I ask them to pick a product. You start your search at the product level, then work back to find out where you can buy it. The only exception I consider for this is if you can find a local manufacturer, in that case you’d be starting at the manufacturer and working down.

Now, what about getting your own products made overseas? It is a big headache. If you could pay with a credit card and have the products shipped to your door, it’d be easy, but that isn’t how it works. You need to pay with bank transfers, which are scary because if this little factory in China rips you off, you’re screwed, you can’t get your money back (of course you could fly to China to handle things, but that adds other expenses as well). Then you have to worry about shipping to the port, customs brokering, then trucking to your location. Headache Headache Headache.

I’ve done it once on my own and I hated it. I got real cheap products though with better margins than if I had bought from an importer, but it was such a headache.

For my newest venture I hired a consultant who handles all of that junk for me, including flying to China to make sure the products are being made appropriately. It isn’t cheap, at $750 a month, but this overall project is costing me over $125k so in the grand scheme of things the additional per-unit cost for having the consultant is only going to be about 50 cents, and that I can swallow.

I wouldn’t start out with that though, get your feet wet. Buy from US manufacturers and importers first, build up a customer base, learn your industry, and when your business is generating enough revenue to cover it, then look into producing your own products.

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Posted in: Ecommerce »  by: Chris

2 Responses to “Find Suppliers for Ecommerce Sites”

  1. Brendon  Says:
    September 13th, 2007 at 6:09 pm

    Great stuff as usual Chris.

    People always underestimate how important a reliable quality supplier is.

    Here’s a couple of my many bad experiences with suppliers/manufacturers that cost many thousands of $$$:

    “How many of these can you supply me with Mr Manufacturer?”

    He says with a sneer “As many as you can sell Brendon.”

    This manufacturer was selling to other web sites selling the products – they’d sell 5 a month. Within 2 weeks we were selling 150 a day (of a $200 product).

    2 weeks before Christmas, with sales at 150 a day he rang to say he couldn’t supply anymore as he’d exhausted his staff and his supplies of the raw material he needed to make our product.

    Right now we have 500 back orders of a product we sell for $50. The stock was supposed to come in yesterday (after a 2 week delay). The supplier rang and said they didn’t get the stock in and it’s another 2 weeks away. This was after we’d been promised the stock 2 weeks ago, the day before and just 2 hours before we got the call saying they didn’t have the stock.

    Get a quality supplier who can supply. Sounds simple enough, but it’s the critical piece of the puzzle.

  2. Chromate  Says:
    October 1st, 2007 at 12:24 pm

    I’ve imported a couple of products from China, and as Chris says, it’s a scary experience. I spent ages checking them out to make sure everything was legit. In the end it turned out great. They even sent photographs of the boxes being loaded onto the shipping container, which had our name written on the side.

    Another time, I was using an agent in the UK to import flash memory. Sent the money, the products reached the UK and then the agent said that the products had been held at customs due to some legal problem. I eventually got our money back, but at some points we were pretty sure we were going to be out of pocket a few thousand.

    Research, research, research, before parting with any money.

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